The phrase "backroom deal" suggests sleaze and corruption. But sometimes bad things happen in plain sight.
Officials in Kansas City, Missouri, want to build a 1,000-room hotel near Bartle Hall. They have been told that the city needs a supersized hotel if it wants to compete with Denver and Indianapolis for convention business.
The hotel will come at a steep price and carry substantial risk. The price is $280 million in the latest estimate. The city will issue bonds to pay for its construction, putting the general fund in jeopardy if rooms go empty.
The politicians, downtown interests and tourism boosters who want the hotel to get built have been smart. They seem to be making an effort to get everyone used to the idea of a convention hotel. We're being carried into the pool one step at a time, not thrown in the deep end.
Last year, the City Council set up a steering committee to handle the 1,000-room hotel. The committee has subcommittees. It sends out press releases. Everything looks nice and orderly.
On April 26, the committee accepted a subcommittee's recommendation and selected a potential site for the hotel: the block on which the Kansas City Power & Light Building stands. The site drew favor because of its location between the convention center and the Power & Light District — two existing big-ticket items with debt obligations stretching for miles.
Councilwoman Cindy Circo, the steering committee co-chair, took time during the April meeting to address unnamed critics. Circo emphasized the transparent manner in which the committee conducted its business. She drew attention to the fact that the meeting was open to the public, just as others had been.
I've been to a few committee meetings. I can attest that they do not take place under Tiffany lamps with cigar smoke curling to the ceiling.
Transparency is not the problem. What the process needs is more critical thinking.
To illustrate my point, I want to look back on some momentum-building moments.
Let's start at January 9, 2007. That was the day when a 62-page report encouraging the city to build a 1,000-room hotel was completed.
The study was produced by a Minnesota-based consulting outfit called Conventions, Sports & Leisure International. The consultants knew the city. They had contributed to a previous proposal that led to a renovation and an expansion of Bartle Hall — the hall's second expansion in 15 years.
City Hall took action on the hotel study. Outgoing Mayor Kay Barnes and the City Council passed an ordinance embracing its findings and encouraging the new mayor and council to begin planning so the downtown renaissance might continue.
Two nights later, 800 civic leaders enjoyed a banquet dinner and jazz at Bartle Hall to celebrate its recent $150 million makeover. The pooh-bahs had high hopes for that Bartle Hall update. In 2004, as the construction work was about to began, Rick Hughes, president and CEO of the Kansas City Convention & Visitors Association, had suggested to me that a new ballroom might double the citys convention business.
Hughes was dreaming. The new convention business did not materialize.
Faulty assumptions were not to blame, however. No, a new story line was emerging. Big conventions were staying away because the delegates didn't have a 1,000-room hotel where they could retire.
On April 3, 2008, the council directed then-City Manager Wayne Cauthen to hire a consultant to develop a funding plan for the 1,000-room hotel. Cauthen did not have to look far. He hired a partnership made up of Conventions, Sports & Leisure and another out-of-town firm.
So a quick summary:
Consultant suggests convention-center expansion. Expansion disappoints. Consultant suggests 1,000-room hotel. No one questions consultant about previous suggestion. Instead, city officials gleefully accept hotel recommendation and hire the consultant to conduct further study.
The hotel, in fact, received an "urgent" stamp from the City Council. On June 18, 2009, on a day when four council members and Mayor Mark Funkhouser were absent, the council allocated $500,000 for professional services — consultants, basically — relating to the hotel project. Councilman Terry Riley asked his colleagues to hold the matter one week. No, he was told. Time was of the essence.
At the same time that it appropriated the $500,000, the council created the steering committee, which instantly started looking for places to build the hotel. Apparently, the ribbon-cutting can't come soon enough.
The site selection got under way before anyone had done a serious cost-benefit analysis. No one knows how a 1,000-room hotel might affect the existing inventory of subsidy-reliant hotels downtown. (The Marriott-Muehlebach complex, the Hotel Phillips, the Crowne Plaza, the Holiday Inn and the Hilton President all receive tax-increment financing.) It's all rising-tide-lifts-all-boats guesswork at this point.
But even guesswork can be beneficial for the people involved.
Around the time that the hotel steering committee was coming together, Circo received a $1,000 contribution from a developer. The developer was Ron Jury, who was beginning to push for putting the hotel on the Kansas City Power & Light Building block.
Later, the steering committee decided that it needed a communications pro. The job went to Kim Carlos, who had advised Circo's political campaign. When I reported the relationship on The Pitch's news blog, Circo assured me that she had stayed out of the process leading to Carlos' hiring. Of course.
The consultants at Conventions, Sports & Leisure also were in line for another payday. Last fall, the steering committee hired its related entity, Convention Center Hotel Advisors, to come up with a viable financing plan.
This bears repeating: The consultants who have told city officials that they need to build a convention hotel have steadily picked up more work based on that recommendation.
It's all pretty cozy. Downtown real-estate pro Paul Copaken serves on the convention hotel financial review subcommittee. Jury recently announced that Copaken's company, Copaken White & Blitt, will join his team in pursuit of the development rights to the hotel project.
Lacking hard data about the financial sense of the hotel, the steering committee is already designing the marketing campaign for a tax increase.
During one of the site-selection meetings, Bill George, the steering committee co-chair, talked about leveraging voters' warm feelings about the Power & Light Building — a Kansas City icon since 1931.
But, hey, all these meetings are taking place in public. So everything's OK, right?
One person who has developed a distaste for the process is veteran real-estate man Whitney Kerr Sr. He says he does not want the city to make a mistake it will come to regret.
"We don't have that many opportunities to do the right thing," he tells me.
Do not mistake Kerr for an unbiased observer. He has promoted a site south of the freeway loop for the convention hotel.
Kerr can tick off a list of reasons why the current home of the American Hereford Association, which sits across Wyandotte Street from the recent Bartle Hall expansion, is superior. He notes that the city already owns two-thirds of that block. That site also has the potential to use federal tax credits for developments in low-income areas.
Some of Kerr's arguments are more convincing than others. Finding "synergy" between the convention hotel and the Performing Arts Center, which is also south of the loop, sounds like developer gibberish to me. What, the American Coalition for Ethanol conference is going to increase demand for opera tickets?
In any event, Kerr says he does not understand why the steering committee has moved so quickly to lock on to a site for a hotel. "I don't think they've done a very thorough job," he says.
Makes two of us.